Snapdeal cuts its losses by 87% in fiscal 2018

SoftBank Group, Alibaba Group and Foxconn-backed online retailer posted a loss of Rs 613 crore in 2017-18, down 87% from the year-ago fiscal when it posted a loss of Rs 4,647.1 croreBiswarup Gooptu | ETtech | Updated: November 07, 2018, 08:09 IST

Jasper Infotech, which owns and operates online marketplace Snapdeal.com, cut its losses sharply in fiscal 2018, a period that saw the Gurgaon-based company forced to undertake a turnaround of its once-floundering business.

On a consolidated basis, the SoftBank Group, Alibaba Group and Foxconn-backed online retailer posted a loss of Rs 613 crore in 2017-18, down 87% from the year-ago fiscal when it posted a loss of Rs 4,647.1 crore, according to documents filed by the company with the registrar of companies.

However, total income for fiscal 2018, including revenue from operations, came in at Rs 514.5 crore, a more than two-fold drop in topline, compared with FY17 when it reported revenue of Rs 1,105.7 crore, as the company moved away from premium branded products, and more towards seller-branded products.

"Our prime focus last year was to maximize the operating efficiency of the marketplace ahead of implementing our planned growth initiatives. We are extremely pleased to see the incredible results from our disciplined execution,” a Snapdeal spokesperson said in a statement.

“Parts of the revenue, which were disproportionately loss making, were identified and curtailed during the year in order to realign the business for growth with healthy margins.”

In an exclusive interview with ET in September, Snapdeal chief executive Kunal Bahlhad said the company, which at its peak was valued at over $6 billion, had been sharply cutting costs, while also moving away from certain categories, such as premium smartphones and high-end consumer electronics, to improve margins.

“We want to be the dominant player in the long-tail segment of the market in terms of selling seller-branded selection, which was really what our roots were as a company and company’s target (back) in 2012,” Bahl had told ET.

“A lot of energy actually went into cutting out all the inefficiencies in the system. The third thing was focusing very sharply on the type of merchandise that we wanted to drive on the platform,” the company’s CEO had said at the time.

Operating expenses for the year to March 31, 2018 came in at Rs 661.9 crore, down more than 73% compared to the previous fiscal, as the company slashed costs related to employee benefit expenses, marketing and promotional expenses and technology-related spends.

In his interview with ET, Bahl had said that the company’s cash burn, over a 12-month period, had gone down by 100%.

“In June 2018, we actually made some cash at the company level. Given that we have a very strong balance sheet, we have about Rs 1,000 crore, it is a problem of capital allocation for us,” Bahl had said.

The previous fiscal was also the period when Snapdeal’s founders had to fight off an acquisition bid by rival Flipkart, also the country’s largest ecommerce company, and which was orchestrated by the online marketplace’s largest shareholder, Japan’s SoftBank.

However, with the proposed deal collapsing in July last year, Snapdeal unveiled its 2.0 strategy that saw it pivot, once again, to a pure marketplace model, and sell off its assets, a list that included digital payments platform FreeCharge, logistics arm Vulcan Express and multi-channel order management unit Unicommerce.